Labour plans to change the way schools are funded to remove the pressure to get rid of older teachers and recruit younger ones.

In an interview with The TES, David Blunkett, Labour’s education spokesman, said that current funding mechanisms made it “virtually impossible” for a school to be able to afford an experienced long-serving teacher. He was “very sympathetic indeed” to changing the funding formula.

Mr Blunkett was speaking the day after Ian McCartney, an Opposition employment spokesman had, with Tony Blair’s backing, pledged a future Labour government to ban job discrimination on grounds of age. Mr McCartney wrote to the Association of Retired Persons over 50 promising that Labour would “introduce legislation to make age discrimination illegal, just as discrimination on grounds of race and sex are today”.

But such legislation would have little meaning in the education service unless accompanied by changes in the way schools are funded. Schools used to appoint the teacher they wanted and the salary would be paid by the local authority. But since schools have been managing their own budgets, they have tended to recruit younger, and therefore cheaper, staff and to encourage expensive older teachers to take early retirement.

Mr Blunkett said he was worried that schools were losing long-serving teachers who might not have wanted to retire but who felt they should give up their jobs in order to help the school.

He mentioned the case of Bob Nicholson, head of West Moors Middle School in Bournemouth, who announced last month that he was leaving his job to avoid making three part-time staff and one full-time teacher redundant.

“That’s an intolerable position to put people in,” Mr Blunkett said. “It’s not healthy for the service, because we need a mixture of new blood and people coming in at different ages. We need long-serving teachers to act as mentors and guides in what is a difficult few years when you first come into teaching. ”

He said he was sympathetic to changing the funding formula to address the real cost of a school’s salary bill. He added that it should not be a rigid permanent feature that would leave schools with long-serving teachers better off than others after the older teachers had moved on.

“I am looking for a criterion that is sensitive to the retention of teachers and at the same time isn’t bureaucratic,” he said.

Labour acknowledged in its recent policy document, Diversity and Excellence, which set out its plans for a new framework for both local education authority and grant-maintained schools, that the existing funding formula should be reviewed, “to provide greater fairness and flexibility”.

Mr Blunkett plans to make a commitment to changing the LMS formula in the party’s forthcoming document on school standards and effectiveness, due to be published towards the end of the year. The document will also tackle school admissions.

A full interview with Mr Blunkett, whose autobiography is published next week, will appear in next week’s TES.